Owners in Hot Water

On November 13, 2001, Governor George Pataki signed into law a bill that shortens the time period for New York City residents to file grievances about erroneous water bills issued by the New York Department of Environmental Protection (DEP).

Pataki's action was a stunning blow to consumer groups, which only three weeks earlier had scored an apparent victory on the issue. On October 28, 2001 Pataki had signed a bill extending the grievance period from two to six years. The latest bill, S.5821, introduced on October 29, reduces the grievance period to four years.

The Coalition for Water Bill Justice, a DEP watchdog group, and other citizen groups had fought for a six-year grievance period to ensure that overcharged water customers would not be cheated out of refunds they deserve. The battle over this issue began in 1999 when the New York City Water Board unilaterally shortened the grievance period from six years to two. Angry water customers had sought redress in Albany ever since.

This new compromise bill was introduced at the request of the governor, as part of a deal he made with the administration of former New York City Mayor Rudolph Giuliani. The sponsors of both the original legislation and the compromise bill were Assemblyman Peter J. Abbate Jr. (D-Brooklyn) and Senator Serphin Maltese (R-Queens).

This is the first time in New York State legislative history that a law was made that purposefully reduced a grievance period for overcharged consumers. It is particularly ironic that the legislation singles out New York water customers for a reduced grievance period, since DEP customers have suffered disproportionately from a mismanaged water billing system. This kind of legislation sets a dangerous precedent for other utility companies in New York State to follow. My organization is appalled that the governor has granted DEP a license to cheat water customers.

Heavy lobbying from the Giuliani Administration, which fears financial losses if DEP is forced to refund money for water bill overcharges, has influenced Pataki's actions on this issue. Giuliani and Pataki have formed their alliance on this issue despite strong opposition from the city council, the state consumer protection board, the office of the public advocate, all members of the New York State assembly and senate, and a diverse group of citizens and businesses.

For two years, Pataki has come up with a changing array of reasons why DEP should be allowed to limit the grievance period and to keep refunds that are due to water customers. In 1999, he cited concern for bondholders of the Water Finance Authority when he vetoed a bill that would have restored a six-year grievance period. Later, legal experts deemed the bondholder rights argument invalid, but Pataki still refused to extend the grievance period to six years, clearly bowing to pressure from the city.

The Coalition for Water Bill Justice supports a six-year grievance period for the following reasons:

(1) A six-year grievance period is the utility industry standard throughout New York State and most of the United States.

(2) A grievance period of less than six years reduces DEP's incentive to reduce billing errors. DEP's hidden motivation for a shorter grievance period is to eliminate or reduce the high volume of complaints, without having to address their severe billing problems.

(3) Since DEP's billing problems are massive, a six-year grievance period is necessary to allow customers sufficient time to properly review and file for refunds for these frequent overcharges.

(4) Elderly and non-English speaking people are particularly harmed by a shortened grievance period, as they may be the least able to understand and detect errors in DEP's complex bills. Moreover, elderly people on fixed incomes can least afford to be overcharged and denied refunds. That is why the American Association of Retired Persons issued a memorandum in support of a six-year grievance period.

My group feels that the only beneficiaries of a reduced grievance period are DEP bureaucrats, who get to reduce the high volume of complaints, without having to address their severe billing problems. The governor should have sent a signal to DEP that they must reduce billing complaints by reducing billing errors—not by prohibiting customers from making complaints. Instead, the governor chose making the jobs of bureaucrats easier over protecting consumers.

There is no shortage of evidence that DEP has massive billing problems. At a public hearing on June 21, 2001, the Water Board reported that:
• 75,000 water meters currently need repair or replacement
• 50,000 outstanding work orders, including leak and waste inspection and reading verifications
• 1,800 DEP contractor meter replacements need inspection
• 600 plumber-installed meters need inspection
These frightening statistics clearly illustrate the extent of the billing problems DEP customers are faced with. A backlog of 75,000 broken meters translates into 75,000 guestimated bills. It is up to the customer to challenge the fairness of those estimated bills, and city residents and businesses should have six years to do so, just as others across the state and the country do.

Michael T. Lockhart is chairman of the Coalition for Water Bill Justice, a grassroots organization dedicated to the advocacy of fair billing practices for New York City water customers.